Card Payments v Real-Time ACH: A Global Battlefield

There was a good blog published in Finextra that outlines some of the complexities arising out of the development of global standards for faster payments. On one hand we have the global card network which are already delivering on a global standard that works:

“Card transactions use almost universally the ISO8583 standard. This uniformity and ubiquity are a remarkable achievement, especially in comparison to the much lower volume interbank payments which use a diverse set of standards, often country-specific and typically incompatible.”

That being said, a lot of effort is being invested in making ISO 20022 the new global standard. It’s all about better data and, of course money:

“…the data-richness of the ISO20022 standard (although ISO3583 is more data-rich than many realize), and the sophisticated toolsets and utilities that come with it. These tools greatly simplify definition of new message sets and rules, and in turn, make ISO20022-based systems easier and less costly to maintain than ISO3583-based systems (which don’t have a similar set of tools).

The industry is far from a uniform adoption of the new standard, however:

“… just adopting ISO20022 does not guarantee interoperability between payment systems that use it. That is why there is a global standards initiative, the ISO Real-Time Payments Group (RTPG), led by Payments UK, and formed of over 40 payments organizations from around the world, which is defining a common approach to using ISO20022 for real-time payment messages and processing rules.”

Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group